Entrepreneurs are Everywhere show No. 5: Daniella Yacobovsky and Jane Moritz

Nature and nurture together shape successful entrepreneurs. And it’s possible to balance work and family when doing a startup.

Family relationships influence founders and their startups. That was the message from the two latest guests on Entrepreneurs are Everywhere, my radio show on Sirius XM Channel 111.

Daniella Yacobovsky

Daniella Yacobovsky, co-founder of online jewelry retailer BaubleBar, and Jane Moritz. a food entrepreneur who owns Challah Connection, an ecommerce site specializing in Jewish gift baskets, joined me in Sirius’ New York studio.

Listen to the full interviews by downloading them from SoundCloud here and here.

Clips from their interviews are below, but first a word about the show:

Jane Moritz

Entrepreneurs are Everywhere airs Thursdays at 1 pm Pacific, 4 pm Eastern on Sirius XM Channel 111. It follows the entrepreneurial journeys of founders sharing their experiences of what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries to entrepreneurial education and more.

The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs, lows and pivots that pushed them forward.

Daniella Yacobovsky, co-founder of BaubleBar, previously worked at American Capital Securities and UBS Investment Bank. She discovered that investment banking wasn’t for her, and chose to do a startup instead.

She told me she was born with an entrepreneurial streak that her parents fostered.

It’s probably a mix of nature and nurture. You have to be born with a little bit of (an entrepreneurial) streak. … I definitely have friends who I meet who I think, “I cannot ever see you doing this type of a job,” and there are elements of personality they think are ingrained in you and that you’re born with. Then I think there are some that you learn and that are honed in you in terms of having life experience whether it’s in school or whether it’s in some of your early jobs or early parts of your career.

My parents definitely pushed me to work hard and to be independent, and definitely pushed me to be an independent thinker. That’s something that they really taught… all three of us from a very, very early age, whether it was encouraging reading or having conversations at the dinner table, whether it’s about politics or current events, really encouraging us to think for ourselves and have our own opinions, and really pushing us to be thoughtful about how we approached the world. I think that that’s a really valuable skillset to take to starting your own company or having your own venture.

If you can’t hear the clip, click here.

She explained that working as an investment banker didn’t allow her to use the skills her parents had encouraged.

I wasn’t challenged. I felt like I was constantly doing a lot of the same work. … At a young age I still felt that I had really great ideas that I wanted to bring to the table, and it’s just very hierarchical. (At a big company) it’s really hard to make your voice known and be able to have a seat at the table.  

If you can’t hear the clip, click here.

Jane Moritz owns Challah Connection now, but previously founded her own direct marketing agency, DMTG, which she ran with her husband. They had a young family at the time.

Jane shared how she and her husband worked together to achieve a work-life balance.

This is a good lesson for entrepreneurs: Be careful what you wish for. (When) I started (DMTG) my (future) husband (Josh) and I were engaged at the time, but I knew we were going to get married. I had this idea for this business where I was going to be able to work … part-time, like three days a week or something like that.

… Very quickly, I got a lot of business. We got married and then I had my first child. I had so much business, it was way beyond what I could handle.

… Just as I was pregnant with my second son — we have three sons — I said to Josh, “I just can’t handle this. This is way too much.” While I wanted to work, (being a mother) was very important to me, I didn’t want my kids being raised exclusively by our beloved babysitter. I wanted to be there.  

Maybe a month or so before my second son was born, Josh was very unhappy in a job … at another direct marketing agency in (New York) city. We decided, you know what, let’s just take the plunge. You join my company and together we’ll grow it. We did. It was very scary at the beginning because here we were both self-employed doing this together.

… We built that company up together for about another eight years and then we sold it to Earle Palmer Brown.

Now the very great thing about that period, though, was that Josh and I really shared the company and we shared kids. We had a great setup where we both worked four days a week and one day he was home with the kids and one day I was home with the kids. Our clients understood that.

If you can’t hear the clip, click here. 

When Jane purchased Challah Connection, it was a local challah delivery service for the Jewish Sabbath. She initially planned to grow the service nationwide, in a model similar to the cosmetic and food subscription services popular today. Customer feedback pointed her in a different direction:

This was 2002. The Internet e-commerce was really just getting going and I thought I would build (the business) up using the Internet and UPS, etc. …

One day I picked up the phone and called Florence Fabricant (food critic at) the New York Times and I said, “I just want to tell you about my company.” It was a stroke of luck that she answered the phone. … 

She loved the idea … and in February 2003 (the Times published an article about Challah Connection). … We were inundated with orders that day and phone calls. …

That did not make our business, but it did put us on the path that we’re on now. In the article … Florence talked about the Challah subscription program and said that we also sold babka and Russian coffee cake. … Ninety percent of the people that called that day and for the next few weeks said, “Can you take those three things and put them in a gift basket?” … I’d never even thought of gift baskets. … of course I said, “Absolutely!” …

That turned on the light bulb in my head that said, “Oh, this is really interesting. This is what they want.” And also that… was a whole lot more profitable than selling challah subscriptions. …

If you can’t hear the clip, click here.

The idea for BaubleBar originated during one of the midday shopping trips Daniella and her co-founder, Amy Jain, had a habit of making. Here’s how they got to know their customers:

The first thing we said was, We know we would love this, but will other women love this? So we started doing surveys and … testing selling product. We would buy a product from wholesalers because we obviously didn’t want to go out and invest in a whole production arm and we started testing: Would women buy this product at a $20 price point, a $30 price point, a $50 price point, a $70 price point? We sold product literally out of our apartment. …

… We learned a lot about the type of product that (the customer) wanted and the price point that she wanted it at, and we learned a lot about merchandising assortment, which was incredibly helpful. … We had this thesis that jewelry is a category where women are really experimental in terms of their style. They want a really broad range and a broad selection, but that’s obviously expensive to produce against, so we needed to test that a little bit. 

…Every time we did these shopping parties… in our apartments … we would really monitor what women were buying and we found they were buying a really broad range. 

If you can’t hear the clip, click here.

Here’s how they knew they were on to something:

We wanted to really to get an understanding for, OK, well, this customer group that we know really well because they’re our peers and they go to school with us, they like it. What about total strangers? What are they going to do?

We put up this website. … It was a closed site, meaning you had to sign up for an account and be invited to shop. … We could not afford (to advertise, so) we sent emails out to all of our friend groups (tens of thousands of people), and we really pushed people.

… a lot of people shared (the invitation) with friends. People started forwarding it, and it … picked up steam. We got a lot of traffic to our little testing site (and) we started selling product. 

(But) what was most exciting is not only did we sell product, but as we were putting new products up people we didn’t know kept coming back. What we got most excited about was … we had women coming back and buying from us four or five times within the first three to four months of being up as a site. I think at that point Amy and I looked at it and said, “We think we’re really onto something.” That kind of sticky behavior for us really validated this idea that there is a consumer need.

If you can’t hear the clip, click here.

Listen to Daniella’s full interview here

If you can’t hear the clip, click here

Jane initially ran Challah Connection from her house:

(In the early days), we did all the (order) fulfillment in my basement. Our living room was our customer service center. For holidays we would have to take over the dining room, the family room for other packing and outbound calling, but we basically took over the whole house. In February 2014 (having acquired thousands of customers) we moved to a warehouse. 

If you can’t hear the clip, click here. 

And as was the case for Daniella, Jane’s family support was key in shaping her entrepreneurial path:

Both my parents were very entrepreneurial. My father was a dentist, a very prominent dentist in Stanford and he also developed real estate on the side. My mother … created a line of cosmetic organizers that she was selling into all kinds of large department stores. She also sold direct to consumer, this was back in the ’70s when there was no Internet, but she did those small ads in the back of the New York Times.

… Also, my father was very prominent in our lives and my mother as well, but my father had some lessons that he taught myself and my 4 siblings. One of those lessons was that self-employment and entrepreneurism was the ticket to freedom. … that that really stuck in my mind. … My father was actually very progressive and he felt that even in his day, again, in the ’60s and ’70s … that women should have a fair shot at everything. He taught us a lot about empowerment and wanting us to go on to be successful and so on. He was very cool. 

If you can’t hear the clip, click here.

Listen to Jane’s full interview here.

If you can’t hear the clip, click here.

Listen to the Daniella and Jane’s full interviews by downloading them from SoundCloud here and here.

Next on Entrepreneurs are Everywhere: radio personality and food entrepreneur Al Milukas of Live the Live, and Zahra Aljabri and James Faghmous of Mode-sty, an online clothing retailer of modest styles.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111

Entrepreneurs are Everywhere show No. 4: David Lerner and Gary Marcus

Growing interest in entrepreneurship is driving a culture change across Columbia University. And Silicon Valley’s pay-it-forward culture is a huge help to startup founders.

Culture matters whether you’re starting up or helping others to do so. That was the message from the latest guests on Entrepreneurs are Everywhere, my radio show on Sirius XM Channel 111.

Dave Lerner

Dave Lerner

David Lerner is an entrepreneur, angel investor and director of entrepreneurship at Columbia University. Gary Marcus, one of the country’s best-known cognitive psychologists, is a professor of psychology and neural science at NYU and founder of Geometric Intelligence.

Listen to the full interviews by downloading them from SoundCloud here and here

Clips from their interviews are below, but first a word about the show:

Gary Marcus

Gary Marcus

Entrepreneurs are Everywhere airs Thursdays at 1 pm Pacific, 4 pm Eastern on Sirius XM Channel 111. It follows the entrepreneurial journeys of founders sharing their experiences of what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries to entrepreneurial education and more.

The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explore the habits that make them successful, and the highs, lows and pivots that pushed them forward.

Entrepreneurship bringing people together 

David Lerner became the director of Entrepreneurship at Columbia University after seven years running Columbia’s Venture Lab. He is also an adjunct professor of entrepreneurship at Columbia Business School, and an angel investor hailed as one of New York City’s top 100 early-stage investors.

He explained that entrepreneurship is the galvanizing force as Columbia University works to redefine its culture and became an outward-facing institution.

Dave: We’re trying to take a lot of the stuff that you’ve done with the Lean LaunchPad methodology and move that out across university into the other schools.  

… Entrepreneurship is the tip of the spear for efforts to try to galvanize siloed groups. Everyone is interested in solving problems. And entrepreneurship is a mysterious force that everyone is interested in and it brings everyone together. It’s not threatening. It’s collaborative. It’s creative. We’ve had a lot of success in bringing people into the community and welcoming them. 

Steve:  This is both student projects and faculty research as well figuring out how to apply some of the basic research that faculty is doing, right?

Dave:  Absolutely. … I would say that in the last five or six years, it’s gone from a weird conversation to have to if you’re not having it, you’re not in the mainstream anymore. Everyone is involved in the innovation entrepreneurship community in some way now.

If you can’t hear the clip, click here.

What’s more, as the Lean Startup revolution has gone mainstream, Dave said, it has started to change the trajectory of our economy.

I’m seeing it in real time. I’m teaching Launch Your Startup and the Greenhouse Accelerator at the (Columbia) Business School. There’s more interest on the business school students and engineer students than there’s ever been. A lot of them are fed up, they’re not going back to the consulting firms, they don’t want to go back to their banking jobs. They want to create something new and it’s palpably different than it was five years ago. It’s in the air. It’s a conversation. If you don’t know about it your first year, you certainly will find out about it by meeting your peers. …

… I think universities that don’t have an entrepreneurship focus now are in the minority. I’ve seen so many of my colleagues are hiring entrepreneurship directors, creating new programs. They want to collaborate. They want to learn from what we’re doing, from what other schools are doing. It’s in the air, whereas five, six years ago, it wasn’t even spoken of.

If you can’t hear the clip, click here.

Gary Marcus is professor of psychology and neural science at NYU and CEO and founder of the artificial intelligence (AI) startup Geometric Intelligence. Described by The New York Times as “one of the country’s best known cognitive psychologists,” he is the author of four books including Kluge: The Haphazard Evolution of the Human Mind, and the New York Times Bestseller, Guitar Zero; and writes frequently for The New York Times and The New Yorker. In addition, he is co-editor of the recent book, The Future of the Brain: Essays By The World’s Leading Neuroscientists.

As he has worked to build Geometric Intelligence, Gary has found valuable help from other founders thanks to Silicon Valley’s pay-it-forward culture.

I’ve been blessed by having a lot of very supportive people in Silicon Valley, including you. … We’ve spoken a few times and you’ve been very generous. I found a lot of people in the Valley have really been there for me when I’ve had questions, “How do you handle this? What do you do with an advisory board?”

…It’s an amazing (pay-it-forward) culture, actually. Academia does not have that culture, at least in the parts that I’ve been. I actually found that people have been nicer to me in the business world. I don’t doubt that we will come up with some cut-throat competitors yet and so forth … but so far people have been really generous with their time. It’s been great.

If you can’t hear the clip, click here.

Gary also told me why being a science professor was good training for being an entrepreneur

It’s not that different from running a lab where you have to raise funding. You have to pitch your ideas to different people all the time. …I had a lab in the university…. It varied between two and ten people at different times…. A lot of the skills that I developed there, and also in the writing for the public, have been very valuable in making, you know, in liaison with the investors and helping to recruit people. It’s actually not that different a skill set.

If you can’t hear the clip, click here.

The stuff founders are made of

Dave shared what he looks for in a founder:

I’m always looking for somebody who is courageous, who is relentless, who’s prepared for the long slog that is inevitable, and who’s on a mission and so focused that they’re just going to keep moving no matter what…

… I remember with my dad and myself, people were saying no to us constantly, I don’t even think it registered when people said no to us.

Steve:  I’m going to remind everybody that no is just the beginning of a conversation for an entrepreneur …

Dave:  Exactly right. …

Steve:  Maybe fearless and relentless (are also key traits)?

Dave:  I think so. The one thing the one sort of tale that I have is, when you’re having a conversation with an entrepreneur, how deep down the rabbit hole are they ready to go? I’ll give you an example, there’s one friend of mine … the CEO of venture-backed company… it’s a parking app… but when he was starting out, … I said, Sean, what do you know about parking, you’ve been in e-commerce … and then probably for two hours, question after question he just kept going down a rabbit hole, and he was ready to go for eight hours to talk about algorithms, and zones, and cities. Every aspect of parking you could possibly imagine. I was ready to get carried out on a stretcher- 

Steve:  He became a domain expert?

Dave: Yes he did.

If you can’t hear the clip, click here.

Dave was a champion chess player in high school and honed his game with the help of his peers. He told me why learning to play chess is like being an entrepreneur:

Dave:  In retrospect I’ve kind of realized that those guys to me, they had this closed knowledge. This is of course, pre-Internet. Once you were sort of in with the club, so to speak, and had access to this knowledge you immediately starting performing, you know, 10 acts of what you ever were before.

Steve:  I see. I’m surprised you went there. It wasn’t like chess taught me how to think multiple layers deep, it was actually that it was a closed system of knowledge, kind of like investment banking or venture capital or startups that once you got in the club someone would actually teach you. Is that?

Dave: Exactly. Truly it was like an apprenticeship model and of course, they didn’t have an eloquent way about them, it was gruff and rough, and there were a lot of insults but … kind of like startups, they let you in fine, begrudgingly and if you showed up and you had heart they appreciated it.

If you can’t hear the clip, click here.

Listen to Dave’s full interview here

If you can’t hear the clip, click here. 

Gary shared why he decided to go for it and do a startup.

I had dinner with somebody … who closed a deal one night. … He couldn’t tell me what it was, but I read about it the next night. It was this company DeepMind, which sold to Google for $650,000,000. I read what they did, and I was like, “You know, what they had is one really interesting technology” …

…I was like, “Why am I writing about this for trivial amounts of money? Maybe I should do it.” They assembled a really cool team, and they had some good ideas. I had some good ideas that I’d been sort of ruminating on for a long time. I knew how to put together a good team, and I started doing it. Then, I started talking to people in Silicon Valley, and they were very receptive.

(I had) an epiphany …These ideas that I’ve been chewing on might actually be useful to somebody on a large scale.

… For three months I just sat on the idea. … “Should I write a book, or should I start a company?” … There’s a good chance I’ll make more money doing this, but I’ll also be more stressed.

I really like writing for The New Yorker. This is a good gig I have, and I figure the odds of becoming manic-depressive if I ran a company were pretty high. I was like, “Is that going to be worth it?” Eventually, I decided that this was a special moment in time. This was my one chance. I could always write another book.

This is a moment where the kinds of ideas that I had seemed like they might be commercially very valuable. It seemed like there was a lot of funding around. I talked to Adam D’Angelo, who is the CEO of Quora, about what I was doing. I didn’t even ask him for money. He offered me money, and his name sort of helped me to raise money from other people.

It wasn’t very hard to raise money…. Some of it’s like the feel was at a right moment. I approached an old friend, Zoubin Ghahramani, who’s really a top machine-learning expert, and he was excited to do it. All these things seemed to fall into place very quickly.

… Five years from now someone else might have had the idea that I had. A good idea isn’t fresh forever. … The whole market could change. … It felt like this really is the moment if I’m going to do it. Now is the time.

If you can’t hear the clip, click here.

Still, it’s been a steep learning curve

There is a ton of things I had to learn about lawyers, which I’ve hated every minute of… There are (also) challenges in the beginning like negotiating equity (how to split up stock) among your founders and with your employees and things like that. …There are lots of things that need to be negotiated. I have gotten … a lot of practice at negotiation let’s say, and you don’t do it in quite the same way in academia, but it’s not totally different.  

If you can’t hear the clip, click here.

Listen to Gary’s full interview here

If you can’t hear the clip, click here.

Listen to Dave and Gary’s full interviews by downloading them from SoundCloud here and here.

Next on Entrepreneurs are Everywhere: Daniella Yacobovsky, co-founder of BaubleBar and Jane Moritz, owner of of Challah Connection.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111

Entrepreneurs are Everywhere Show No. 3: Frank Rimalovski and Frank Sculli

You have to teach entrepreneurs how to fish rather than serving dinner for them.  And wishing you had asked for help much earlier in a startup.

Giving help and getting help. Those were the messages from the two latest guests on Entrepreneurs are Everywhere, my radio show on Sirius XM Channel 111.

Frank Rimalovski

Frank Rimalovski

Frank Rimalovski, executive director of the NYU Entrepreneurial Institute joined me in the studio to discuss how the Entrepreneurial Institute is transforming the culture at NYU; and Frank Sculli, co-founder of BioDigital Inc shares what he wishes he’d known before he started his company.

Listen to the full interviews by downloading them from SoundCloud here and here.

Frank Sculli

Frank Sculli

Clips from their interviews are below, but first a word about the show:

Entrepreneurs are Everywhere airs Thursdays at 1 pm Pacific, 4 pm Eastern on Sirius XM Channel 111. It follows the entrepreneurial journeys of founders sharing their experiences of what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries to entrepreneurial education and more.

The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explore the habits that make them successful, and the highs, lows and pivots that pushed them forward.

Teaching entrepreneurs how to fish
Frank Rimalovski is the executive director of the NYU Entrepreneurial Institute and managing director of the NYU Innovation Venture Fund. He teaches at the NYU School of Engineering, and for the National Science Foundation Innovation Corps, and co-author with Giff Constable of Talking to Humans: Success Starts With Understanding Your Customers.

Frank has spent 20+ years in technology companies and venture capital, working at Lucent, Sun Microsystems, Apple and NeXT.

Entrepreneurship at NYU is more than just offering  classes. Frank’s goal is have students to leave NYU with skills they can use throughout their business careers. Frank describes how:

The (NYU Entrepreneurial) institute provides a host of resources, programs and the like to help our faculty and students learn how to (start a company). We don’t do it for them but … we teach them how to fish rather than serving up dinner for them.

(There) are proper for-credit entrepreneurship classes but the majority of it happens on an extracurricular, co-curricular basis. The thing that unifies all of them, whether it’s a class or some kind of program is … (that) we don’t just teach people the theory of entrepreneurship, we also teach them how to do it. You taught me the analogy of teaching someone how to be an entrepreneur is like teaching surgery. You can’t just expect someone to read a book and know how to perform surgery. You have to get out and practice it. …

Everything we do is highly experiential. We teach them about it and then we make them do it right away. The other thing that we try to make everything that we do in and of (New York).  We try to bring the entrepreneurs, the investors, the venture capitalists (the entire New York startup ecosystem) into everything we do. It’s done in a real-world context, not in some theoretical context.

If you can’t hear the clip, click here.

The goal of the entrepreneurship program is to change all of NYU’s culture, Frank explained. The NYU Innovation Venture Fund plays a critical role in the effort.

Frank: Somewhat serendipitously through a contact I made through IBM, I learned about this opportunity in NYU… to create a new venture fund to essentially do very similar work to what I’ve been doing inside Lucent and the venture partners … to work with researchers and invest capital to create new startups…. We invest exclusively in startups founded by NYU students, faculty and researchers.

Steve: You’re a venture capitalist essentially for a single school. Is this because you want to support the professors or because the university wants to have an additional source of funds? What’s the rationale?

Frank: …To change the culture within the university. … to be more externally oriented, more market oriented and to get our innovations and ideas to market. … MIT … Stanford … and Berkeley do things similar to this.

Steve: (Was the goal) … to turn NYU into an outward-facing university? Meaning, “Gee, we’re a great research university but we’ve been staring at our navel for 100 years.” Is that a fair way to say it?  “Perhaps we ought to be able to chew gum and walk at the same time?”

Frank: I might not say it that strongly but others could :-) Put another way, you know as well as anybody that the world has evolved in a lot of ways. Big companies don’t just come to universities and line up to (just) license technologies. Similarly, jobs for our students ain’t what they used to be. I view our mission as both to help advance those technologies into the marketplace to get the more informed customers in the market and to help our students create opportunities for themselves at the same time.

Steve: You’re a change agent with a bag of money inside the university, right?

Frank: You can describe it that way.

If you can’t hear the clip, click here.

Frank Sculli co-founded of BioDigital, in 2003 to build a kind of flight simulator for doctors that would be used to train them in specific medical procedures. That original vision didn’t pan out. Frank explains why:

We learned a number of things, (first) that there really was a need there to transform the way people are educated around these concepts (the need for using medical simulators to practice surgical procedures.)

(Second,) we learned that 3D was very effective in doing so…, but why hasn’t it become mainstream yet? … (The reason was) because it wasn’t cost effective. It took too long to develop and … it really wasn’t ubiquitously accessible. You’d build that simulator, and it would sit on a desktop somewhere and you’d have to fly people to that training center to use it. Even if you created a video, the video was accessible but it required updates, those updates were expensive and the formats changed and so on. …

(Third) I think with the adoption of any new technology you need to mitigate risk as best as possible and because of the hefty price tag associated with it, it was hard to do it in volume and even when you did the margins on those projects weren’t spectacular.

If you can’t hear the clip, click here.

Here’s what Frank Sculli wished he’d known when he was building BioDigital:

Frank Sculli: … I would have asked a lot more questions. I would have sought help. I think that I learned that too late…. People have done this before, not (this) specific technology, but they’ve scaled companies and I think it’s incredibly helpful to surround yourself with those people, those mentors and ask the right questions.

Steve:  Do you think it was the fact that you didn’t take venture money, that you didn’t have a board or did you not have the right advisors? … My problem was, I always thought I was the smartest person in the building and didn’t need any (advice). Did you have that problem, too?

Frank Sculli: There’s a little of that when you’re young and you don’t want to reveal that you’re may be incompetent in certain ways …

I think that (now) there is a much stronger supporting ecosystem in New York City and that’s been incredibly helpful. I don’t know if I would have leveraged that better back then. I mean the whole concept of startups just wasn’t really as high profile back then, at least in technology.

Steve:  Where do you get your advice now?

Frank: Investors …with other CEOs whether or not they are in a relevant industry, just becoming friendly with a lot of those people, just mentors. … When you do reach out people are very willing to help. They really do enjoy it.

If you can’t hear the clip, click here.

This was his a-ha moment:

We went from a services company to a company that has a product. (We’re addressing the) same problems but we wanted to solve the problem in a much more scalable way so we saw, around 2011 … the Internet was going to support 3D natively. … We saw the emergence was becoming a standard and … devices had become so powerful that even your phone could run 3D.

We looked back and one of the great things is a byproduct of all those service was just this massive library of 3D assets, 3D models of the human body… that we owned.

I will emphasize to pay attention to intellectual property issues as early on as you can. … When you’re bootstrapping things and you know you’re just, you’re constantly weighing where you should invest your money and highly recommend legal (advice). ..It’s not cheap but (the lack of) it can really come back to haunt you otherwise.

If you can’t hear the clip, click here.

Early in our interview, Frank Rimalovski took us back to his early days in startups. Out of college, he briefly worked as an investment banker in New York, but before long heard the siren song from Silicon Valley.

Here’s what happened:
I started my career in Chase Manhattan Bank … then quickly made my way over to Bear Stearns because I really wanted to be an investment banker and do mergers and acquisitions. … I was 22, 23 at that time. … Bear Stearns was very much a sink-or-swim kind of place at the time which I loved and thrived in, and had a great time doing that. I worked with a lot of really smart people, but after a couple of years realized this is not what I want to spend the rest of my life doing. Like a lot of people at the time, went back to business school to try to figure out what I wanted to do. …  I picked up a book … a recommendation of a friend, called “West of Eden,” which told the story of the founding really of Silicon Valley and ultimately Apple. … I read about Xerox PARC and then ultimately Apple. I was like, “Oh, my God. That is where I want to be.”

… In ’92, the country was in a recession and none of the West Coast companies were coming to North Carolina that year, so I made a point of every free moment I had I’d go to the library and I would read rags like Info Week and PC World and learn about the industry through that. (I would) then spend every free moment I had writing old-fashioned letters to every name I could find in Silicon Valley. Then I would go out there and say, “By the way, I’m here. Can you spare 30 minutes?” I probably got, over the course of a few weeks, 20 or 30 interviews of people. That ultimately led to a bunch of different opportunities.

If you can’t hear the clip, click here.

Working in Silicon Valley left a lasting impression. He told me about meeting one of the startup world’s icons:
The summer of ’92, I was able to con my way into an internship at … Steve Jobs’s Next when it was still an independent company. He’d … recently taken money from Ross Perot. … I was brought in to help them try to figure out a strategy for entering the healthcare market where they were seeing a lot of interest from primarily academic hospitals …

I got to interact with Steve a little bit on my first day. My then-manager Ken Rosen is walking me around the building giving me a tour and we bump into Steve on the stairs and I’m like, “Oh my God, there he is.” Ken introduces me: “Meet Frank, he’s an MBA intern at Duke, he’s going to help us figure out the healthcare markets this summer and he’s definitely qualified because his dad’s a doctor.” There’s this 3-second pregnant pause and I’m waiting for either him to rip Ken a new one or to throw me out of the building.

Then he slaps Ken on the back and there’s a big laugh and he says, “Welcome aboard.” Or something like that and walks off.

I had an opportunity to interact with him a few times over the summer, convince him to go speak at a healthcare-related conference and things like that. The thing that I really took away from that was the interplay and complexity of the industry between the developers and the channels and the integrators. That was something that was I think really hard to wrap your head around as an outsider reading case studies and books in business school.

If you can’t hear the clip, click here.

Frank Rimalovski also shared lessons from Silicon Valley that have stuck with him.
When I went to Sun Microsystems in ’96, the development team that I was working with … was trying to figure out what the next version was going to do. My first instinct was, well let’s go talk to our customers who were developers at the time, and they were like, what do you mean?

I schlepped two of our most senior developers on an airplane. … I remember we went to visit Corel, which was a big developer at the time, and … and a bunch of others, and we actually sat down and spent a couple of hours with these customers, not pitching them, but actually asking them about what worked for them today, what were their problems, what were their issues, what were their challenges, what would they like … A little bit about what they would like to see. This is why when I first learned about customer development, I’m like I get this, this made a lot of sense to me. …

(The senior developers) were not happy that I was schlepping them across the country, but afterwards they thanked me, because they learned so much. … In the end I think they totally agreed that seeing what things really got a rise out of (customers), being able to probe, and have follow-ons and free-form discussion, breaking bread with people, it was a very different conversation than you have online.

If you can’t hear the clip, click here.

Listen to Frank Rimalovski’s full interview here:

If you can’t hear the clip click here.

Frank Sculli explained how Biodigital came to be
Following grad school, it was the inception of the dot com boom. I had fielded a number of different options – everything from going to work in Manhattan in finance to big consulting firms to energy to device companies. … I ended up at at … a smaller niche consulting firm that was growing quickly as a result of the .com boom.

The boom ended quickly and abruptly and the business still survived because they had a lot of business outside of those Internet companies, but the enthusiasm was no longer there. It was at that time that I met my co-founder. He was also at the consulting company and we had strategized for a number of months over the premise of which became Biodigital Systems.

If you can’t hear the clip, click here.

Like many founders I know, Frank Sculli isn’t only focused on the bottom line.
We’re not driven by the money, to be completely honest. It’s about building something big, working with great people. Our mission is to improve health literacy and I really think we’re on to something. … It’s a lot of fun. Every day in the office, we’re really de-mystifying things that were previously incomprehensible to most people. 

If you can’t hear the clip, click here.

Listen to Frank Sculli’s full interview here.

If you can’t hear the clip, click here.

Listen to Frank’s and Frank’s full interviews by downloading them from SoundCloud here and here.


Next on Entrepreneurs are Everywhere: Dave Lerner, director of Entrepreneurship at Columbia University and Gary Marcus, CEO and founder of Geometric Intelligence.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111

Entrepreneurs are Everywhere Show No. 2: Anand Sanwal and Chris Shipley

Starting up requires both passion and a willingness to learn from mistakes, and gender balanced teams outperform imbalanced teams. Those were the messages from the two latest guests on Entrepreneurs are Everywhere, my radio show on Sirius XM Channel 111.

Anand Sanwal, co-founder and CEO of CB Insights; and Chris Shipley, executive producer of MIT’s Solve initiative, joined me in the studio to discuss the day-to-day chaos of building a company.

Listen to the full interviews by downloading them from SoundCloud here and here.
Chris Shipley

Clips from their interviews are below, but first a word about the show:

Entrepreneurs are Everywhere airs Thursdays at 1 pm Pacific, 4 pm Eastern on Sirius XM Channel 111. It follows the entrepreneurial journeys of founders sharing their experiences of what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries to entrepreneurial education and more.Anand Sanwal

The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explore the habits that make them successful, and the highs, lows and pivots that pushed them forward.

Women in startups: ‘It’s just business’
Chris Shipley is executive producer of MIT’s Solve initiative, through which business, technology, policy and philanthropic leaders work together to identify and solve to some of the world’s biggest challenges. A former tech journalist, Chris has built a career identifying innovative startups that create markets and drive positive and disruptive change. As the executive producer of the DEMO conference from 1996 to 2009, she helped more than 1,500 companies make their market debut.

Her 30-year career gives her keen insights to the startup world, how it works and what has changed.

Among the topics she addressed was gender bias in startups:
All the data point to the fact that gender balanced teams outperform imbalanced teams, whether they’re all men, or all women. …You have to be an idiot as an investor not to demand that the team be balanced because that will put your company in a better place.

I think it’s easy to say, “These are my friends from college, and we’re going to start a company.  … These are the women I was in a sorority with … We’ll start a company.” Neither of those teams is going to be optimized for success. When you bring different perspectives to bear, I think you start to have a better company, and a better culture.

… It’s (not just about gender but about perspective generally. I know that there are a lot of … “fill in the blank” and technology, or “fill in the blank” and startups. It’s women and technology, and women and venture, women and entrepreneurship. I think it’s just entrepreneurs. It’s just startups. It’s just business.

I have not made my way through 30 plus years in this industry by being a woman and an entrepreneur. I’ve done it by being an entrepreneur, by being a journalist, by trying to be a thought leader. I think that you just have to do it. I think that you have to demand, the respect, and part of that is by earning it, and working hard.

If you can’t hear the clip, click here.

Chris also discussed how the startup world has changed

Chris: There are cycles. We know about investment cycles. We know about waves of innovation around new markets. …. I think about the early ‘80s, and … all the entrepreneurs who now we think of as sort of tech legends, who were just making stuff. They were just taking advantage of an opportunity and trying to create a market. … (They were operating like) there’s an opportunity and there’s a market need. (So) let’s bring this thing to market, and we hope that we can build great companies and be successful at it. I think we went through a period, and maybe we’re emerging from it, thankfully, where entrepreneurship became a thing to do.

… there was a time over the last 10 years where I started to refer to the startup community as the startup industrial complex. They had created this whole infrastructure for the purpose of starting companies and supporting entrepreneurs and flipping businesses and creating wealth creation, really — a mechanism for wealth creation. … It felt like we were just creating companies for the purpose of flipping them and selling them and going off and doing it again, not for the purpose necessarily of really fulfilling a market need or a larger ambition.

Steve:    You know, I call this the Hollywood-ization of Silicon Valley. Hollywood in the beginning was a bunch of artists who wanted to make entertainment, and then the whole infrastructure of PR and hangers on and the New York money came in.

Chris:    It’s exactly like that. When we get a television show that parodies the Silicon Valley community, and we don’t even notice that that’s what’s happening often, then you kind of know you’re in trouble. …it has to be the easiest script to write you just sit in a café in Palo Alto and write down what you overhear.

If you can’t hear the clip, click here.

Eye on the Prize
Anand Sanwal is the co-founder and CEO of CB Insights, a National Science Foundation-backed data as a service company that provides data and insights to high-growth companies and investors. He got his start at Kozmo, a now-defunct startup that offered free one-hour delivery of DVDs, food and other goods, then went on to manage American Express’ $50 million Innovation Fund.

When Anand left American Express, he knew he wanted to start CB Insights and kept that goal top of mind.

I left Amex Jan. 1, 2008. … (and) the economy tanked right as soon as I started. In the beginning, it was really just do anything to make some money. We were doing advisory work for hedge funds … doing a survey of people in the credit card industry and we would sell this sentiment survey back to hedge funds (and) executives in credit card companies. We’d ask them, “What do you think about delinquencies? What’s going to happen to them?” or the key metrics in the credit card business.

… A lot of this, as I look back, was luck. The mortgage crisis had just happened. Mortgages were understood and credit cards became the next thing everybody was worried about.

There’s some serendipity in this (too). We met a few folks who were distributors of research to hedge funds. They said, “Hey, there’s this gap in the marketplace. Can you guys put something together?” …  We knew we had relationships in the credit card industry just given our background. A lot of ex-Amex people … (and people) at Citi … Barclays … Chase. We could call them up. The quid pro quo … was they got this data back.

… Everybody wanted to know, “Hey, what’s the general pulse of the industry? Where do people think certain key metrics are going?” We knew as we were building that business that it had a very short shelf life. It was basically crisis driven. … 

If they feel that we’ll give them any incremental advantage, they are willing to pay for it. We had credibility. We were the only folks with a product on the credit card space. The three of us who were doing it, we’re all ex-Amex and knew what we’re talking about. … It was like an advisory consulting business (but running such a business wasn’t the goal). … It just paid for a couple years. … That funded us.

 CB Insights was always the goal. … We said we think we can build the Bloomberg of the private company data space. … (So) from when I left Amex, that was the goal. It was just I had a desire to not fund the company by raising capital.

If you can’t hear the clip, click here.

Anand shared mistakes he made early on and what he learned from them. Among these was the realization that a formal onboarding process for new hires is critical.

Anand: Onboarding is when a new employee joins the team. It’s giving them their footing… Making sure they understand everything from where the snacks are, to how to order lunch, to who is on the team, and what’s the product, and all of that good stuff.

Steve:    There used to be this culture, it still is in a number of startups, is you throw them in the deep end of the pool, you assume you hired smart people and they’ll figure it out, right? So what was wrong with that?

Anand: …We hire really high achieving people, and they felt that they weren’t achieving anything. They were just sort of floundering around trying to figure out even the most basic things. The other thing is they didn’t feel like they were connected to anybody in the organization, and that’s hard to do on your own. Some people have that innate ability to go out and just meet people, but we needed to help foster that. The other thing was people didn’t even know our vision as a company, they didn’t know the product.

Steve:    But you’re sitting right next to them. Shouldn’t they have known that?

Anand: Yeah, I mean this was one of my naïve assumptions. I think what we saw was it just doesn’t happen. It actually leads to a sub-par sort of experience.  We spend a lot of time wooing people when we’re recruiting them right, and so we paint this great picture of what CB Insights would be like. Then when you actually showed up, to be very frank back in the day it was pretty bad the first day.  What we want, when you go home that first day to your significant other, your parents, or whoever, is to say, “Hey, I had a really good first day of work and I think I made the right decision.” I don’t think we were living up to that obligation initially. 

If you can’t hear the clip, click here.

Looking forward, looking back

Anand also explained how he learned that company culture doesn’t scale:

Anand: I think the biggest thing that I’ve learned over time is the importance of culture. I think I completely … I underestimated this. I thought culture, to be very frank, was just sort of corporate brainwashing. It was bullet points on the wall. … I thought it just kind of happened organically. You hire really smart people-

Steve:    And they sit next to each other. The osmosis would happen, right? …

Anand: Yeah. … culture does happen up to 10 maybe 15 people (but) it doesn’t scale. (While you’re) building the operating system … you will have a culture, it just won’t be the culture you want.

If you can’t hear the clip, click here.

And he discussed how he draws on the experience of working for American Express to foster innovation within CB Insights today.

Anand: The first thing we did was we codified what do we want the culture of CB Insights to be, what are the characteristics we want. But … just putting it to paper doesn’t really get you there. The next step is what are the actual actions and strategies and rituals and tactics that we’re going to have and how we’re going to reinforce those things.

We do something called “pitching demo day” every three months. Basically we take a few days off. Anybody in the team — it’s not just the developers but from the business, to marketing, to content — can propose an idea. Essentially, they have to kind of rally support from within the team and get other people to want to work on that project. For three days, we just take off and we work on these projects. The goal is that they’re experimental. They don’t have to go get folded into the product. They could just totally sort of die. But experimentation is a big part of sort of what we’re going after. …There’s a lot of good ideas that people on the team have. They get lost when we don’t give everybody a channel to surface them …

If you can’t hear the clip, click here.

Listen to Anand’s full interview here

If you can’t hear the clip, click here.

Chris spoke about watching startup history being made when she was a tech journalist:

Steve:    This was at the beginning of Microsoft’s ascent, right?

Chris:    This is 1984.

Steve:    1984, and so this was when the Apple Mac first came out, Microsoft starts dominating with Windows, and Steve Jobs hires John Sculley, and all these exciting things that we now look back as, I hate to admit, many decades. It was the beginning of the computer industry we kind of take for granted. You were right in the middle of it. Did you have a sense of history at the time?

Chris:    I knew that something was happening, just because there was so much activity and so many people coming into this thing and doing things for the first time. There were a lot of the first spreadsheets, and the first different software applications. It was clearly a sense of maybe an era beginning. I don’t think we ever talked about it in that way, but clearly a lot of pioneering activity was occurring. We were really fortunate to be there at that time.

Steve:    When you started writing about these technology companies, did the pattern kind of emerge about, “Oh, here’s another founder with a standard pitch telling you it’s the best whatever’? Did you kind of go, “Oh, that’s number 903,” after they left?

Chris: Early in my career my job as an editorial assistant was to do the charts in the buyer’s guides. Of course, then we had these long dot matrix printers with the green bar paper, and it would just spew out row after row. I think there were 68 companies at one point in the database buyer’s guide. You knew that all 68 of those were not going to make it, especially when all the features across the columns were very similar. You knew that there was a lot of attempt to be the one, and a lot of repetition there.

If you can’t hear the clip, click here.

And what the startup landscape was like back in those entrepreneurial salad days when she was with DEMO:

Chris:    DEMO is all about pattern matching. I’ve talked to about 1800 to 2000 companies a year… I always think the shorthand for Demo is, “I’ll look at all those start-ups so you don’t have to.” We would talk to all of these companies, these startups mostly, listen to their pitches, look at the products, and try to identify the outliers, the companies, the people that were doing something really different that I thought had the potential to have real impact, that would kind of push markets in new directions. … and use that pattern matching to kind of point the direction to where I thought markets might go. …

There were companies and things that we would not know today — that are not even footnotes in the industry– that had a lot of influence, a lot of impact early on that didn’t quite get the credit in their moment. I think back to … ’97, and there was this company called Hot Office. …. One of the best companies you’ve never heard of. … Web platforms were very, very new at that time. The browsers were relatively primitive. Here’s a company that said, “A browser would be a great way to access a word processor or a spreadsheet. We’ll do office in a browser.”

We had people coming up and going, “Have you lost your mind? There’s no way we’ll ever use a web browser for software. It’s not intended for that.” All I could say was, “I think there’s something there.” It turns out there was. Hot Office wasn’t the company to make that big. The next year Salesforce comes along and then an army of them afterward, but a lot of really early pioneering things that I was fortunate enough to get to see and put on stage.

If you can’t hear the clip, click here.

Listen to Chris’ full interview here

If you can’t hear the clip, click here.

Listen to Anand’s and Chris’ full interviews by downloading them from SoundCloud here and here.

Next week on Entrepreneurs are Everywhere: Frank Rimalovski, executive director of the NYU Entrepreneurial Institute and Frank Sculli, co-founder of BioDigital Inc.

Tune in next Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111

Hacking a Corporate Culture: Stories, Heroes and Rituals in Startups and Companies

I’ve spent this year working with corporations and government agencies that are adopting and adapting Lean Methodologies. I’ve summarized my learnings in this blog post, and herehere and here and here and put it together in the presentation here.

One of the interesting innovation challenges I’ve encountered centers on a company’s culture. While startups have the luxury of building values and culture from scratch, existing companies that want to (re)start corporate innovation must reboot an existing –and at times deeply rooted- corporate culture. It’s not an easy task, but failing to change the culture will doom any innovation efforts the company attempts.


Corporate Innovation Requires an Innovation Culture
Innovation in an existing company is not just the sum of great technology, key acquisitions, or smart people. Corporate innovation needs a culture that matches and supports it. Often this means a change to the existing company’s culture. Persuading employees to let go of old values and beliefs, and adopt new ones can be challenging.


All too often a corporate innovation initiative starts and ends with a board meeting mandate to the CEO followed by a series of memos to the staff, with lots of posters, and one-day workshops. This typically creates “innovation theater” but very little innovation.

Two McKinsey consultants, Terry Deal and Arthur Kennedy wrote a book called Corporate Cultures: The Rites and Rituals of Corporate Life.  In it they pointed that every company has a cultureand that culture was shorthand for “the way we do things at our company.” Company culture has four essential ingredients:

  • Values/beliefs – set the philosophy for everything a company does, essentially what it stands for
  • Stories/myths – stories are about how founders/employees get over obstacles, win new orders…
  • Heroes – what gets rewarded and celebrated, how do you become a hero in the organization?
  • Rituals – what and how does a company celebrate?

The Power of a Corporate Culture
It was in my third startup, Convergent Technologies, that I started to understand the power of a corporate culture. The values and basic beliefs of working in this crazy startup were embodied in the phrase that we were, “The Marine Corps of Silicon Valley.” If the notion of joining the Marine Corps of tech wasn’t something that interested you, you didn’t apply. If it was appealing (typically to high testosterone 20 year-olds), you fought to get in.

By the time I joined, the company already had a store of “beating the impossible odds” and “innovation on your feet” stories. It was already lore that the founders had pivoted from simply building an entire computer that fit on a single-circuit board with a newfangled Intel microprocessor to selling complete desktop workstations with an operating system and office applications (the precursor to the PC) to other computer companies. And the CEO had done the pivot in front of a whiteboard of a customer who went from a “we’re not interested” to a $45million order in the same meeting.

Each subsequent deal with a major computer customer was celebrated (deals were worth ten of millions of dollars) and our salespeople were feted as heroes. When any special custom engineering effort was required to match the over-the-top sales commitments (almost every deal), the engineers were treated as heroes as well. And when marketing went out to the field on red-eye flights to support sales (often), we became heroes as well.

Finally, there were rituals and celebrations that accompanied each big order. Bells and gongs would ring. The CEO would hand out $100 bills, and gave out a $25,000 on-the-spot bonus that was talked about for years. Once he even spray-painted an exhortation to ship a new product on time on our main hallway wall (so crude I can’t even paraphrase it, but still remembered 30 years later).

While my title, business card and job description described my job functions, these unwritten values, stories, heroes and rituals guided the behavior that was expected of me in my job.

Corporate Culture Diagnostic
You can get a good handle on a company’s culture before you even get inside the building. For example, when companies say, “We value our employees” but have reserved parking spots, a private cafeteria and over-the-top offices for the executives that tells you more than any PR spin. Or if a CEO proudly boast about their corporate incubator, but the incubator’s parking lot is empty at 5:15 pm.

I’ve learned more about a company’s corporate beliefs, heroes and rituals by sitting in on a few casual coffee breaks and lunches than reading all of its corporate mission statements or inspirational posters in the cafeteria. In Horizon 1 and 2 companies (those that execute or extend current business models), stories revolve around heroes and rebels who manage to get something new done in spite of the existing processes. Rituals in these companies are about the reorganizations, promotions, titles, raises, etc.

These core values and beliefs and the attendant stories, heroes and rituals, also define who’s important in the organization and who the company wants to attract.  For example, if a company values financial performance above all, its stories, myths and rituals might include how a hero saved the company 5% from a supplier. Or if a company is focused on delivering breakthrough products, then the heroes, stories and rituals will be about product innovation (e.g. the Apple legends of the Mac, iPod and iPhone development).

Hacking a Corporate Culture
For innovation to happen by design not by exception, companies need to hack their corporate culture. This is akin to waging psychological warfare on your own company. It needs to be a careful, calculated process coordinated with HR and Finance.

  1. Assess your company’s current values and beliefs as understood by the employees
  2. Communicate the need for new values and moving employees to a new way of thinking, is hard. It starts with thinking through the new values and beliefs the company wants to live by
  3. Plan a concerted effort to create a new set of stories, heroes and rituals around those values
  4. Simultaneously with the creation of new culture, align the company’s incentive programs (compensation plans, bonuses, promotions, etc.) to the new values. Failure to realign incentives doom any new culture change.

To create an innovation culture a company needs heroes and stories about employees who created new business models, new products and new customers. Stories about new product lines created out of a crazy idea. Or heroes like an old-guard manager who kept sending the best teams to the corporate incubator; or division general managers who adapted and adopted an acquired product and built it into a successful product line, or engineering teams who got out of the building, saw a customer need and built a product to serve it – and ended up with a new division. And the rituals and rewards need to support this type of innovation ( not just existing execution.

Culture change almost always runs into problems – resistance to change (we’ve always done in this way), obsolescence (the world changed but not our values), inconsistency (we give lip service to our values, but don’t really implement them). But the combination of hacking the culture and reinforcing it by changing the incentives can make it happen.

The result of an innovation culture is a large company with a unified purpose that can move with speed, agility and passion.

Lessons Learned

  • Corporate Innovation Requires an Innovation Culture
  • Corporate culture consists of values, stories, heroes and rituals
  • Startups build values and culture focused on innovation from scratch
  • Existing companies who want to (re)start corporate innovation must reboot an existing corporate culture – this is hard
  • You can hack the culture
  • It requires careful, calculated and coordinated process with HR and Finance
  • The result is Innovation @50x

Entrepreneurs Are Everywhere Show No. 1: Richard Witten and Kathryn Minshew

“That which does not kill us makes us stronger.”
Friedrich Nietzsche

Sometimes the best lessons are the most painful. Resilience – the ability to bounce back from adversity – is one of the key attributes of entrepreneurs and was the focus of my first weekly radio show, Entrepreneurs are Everywhere, on Sirius XM Radio Channel 111.
Kathryn Minshew

Richard Witten, special advisor on entrepreneurship to the President of Columbia University; and Kathryn Minshew, co-founder of the popular online career platform TheMuse.com both joined me in Sirius’ New York studio and shared their version of being knocked down and coming back stronger.

Richard discussed how New York City’s rejection of Columbia University in the competition to build a new technology campus was a real wake up call. Kathryn shared the painful lessons she learned when her first startup fell apart.

Listen to the full interviews by downloading them from SoundCloud here and here.

Richard Witten

Clips from their interviews are below, but first a word about the show:

Entrepreneurs are Everywhere airs Thursdays at 1 pm Pacific, 4pm Eastern on Sirius XM Channel 111, and follows the entrepreneurial journeys of founders sharing their experiences of what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries to entrepreneurial education and more.

The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explore the habits that make them successful, and the highs, lows and pivots that pushed them forward.

Make Way for Entrepreneurship – Why the era of the University as just pure science research is over
Richard Witten, is a former General Partner at Goldman Sachs with with 35+ years of experience in the global capital marketplace. He formerly served as Vice Chairman of the Columbia University Board of Trustees.

One of the shifts Richard is seeing in entrepreneurial education is the end of an era focused on pure science research. Here’s what he had to say:

Steve:  One of the surprising things for me sitting in the West Coast, is when (then New York City) Mayor Bloomberg basically dissed all (of the universities in New York and picked Cornell and the Technion for a new applied sciences and technology campus.) Wasn’t the mayor (essentially) saying to Columbia, “Your (applied science program) isn’t good enough. We’re going to set up a special relationship and pick some school up north, Cornell, and some Israeli school.” Was that a shock to the system?

Richard: What shocked us, and I’m sure the folks at NYU felt the same way, was that this seemed to have been a done deal…The prize was an island that sits in the East River, called Roosevelt Island. … The deal was that the city would give most of this island, to Stanford, if Stanford would set up computer science, engineering school east. …The New York universities weren’t particularly happy with that… The mayor, recognizing that he should have involved NYU and Columbia, and perhaps others, opened up the process. Now, neither NYU nor Columbia really want the space. … We wanted other things. We wanted the city to help us, in the case of Columbia, with a data science institute, in the case of NYU, with an urban engineering institute. At the same time, as these conversations were going on with the city, as I understand it, Stanford got cold feet and decided they really didn’t want to extend out 3500 miles. Cornell swept in, swooped in, and offered a tremendous deal for the city, a huge commitment, and Cornell won the bid. It’s a great thing for New York.  

Steve: Was this a wake-up call for Columbia?

Richard: It was…. What it said was that the era of … pure science research is over. (It meant that) universities need to apply their knowledge, and apply their skills, and apply their resources to getting stuff done, and not let the getting stuff done part be something that somebody else does.

If you can’t hear the clip, click here.

Richard shared how Columbia is re-engineering its entrepreneurial program:
We thought that alumni, students, and faculty and/or pedagogy represented three distinct areas of opportunity. On the alumni side, we set up an incubator downtown, called the Columbia Startup Lab. … It has been phenomenally successful. We’re in our second cohort, 71 young folks, all of whom are alums of the university, given the opportunity and resources to build their businesses. Of the cohort that just graduated I think eight are completely self-sufficient and actually revenue positive and another 10 are in Series A round financing. 

On the student side, harnessing the power and the energy that was already there, the largest club at Columbia University is called CORE, Columbia Organization Of Rising Entrepreneurs. There are 3500 students that signed up for this. We run a student competition, at the end of every year. This year the prize pool was $250,000. The winners …  will blow your socks off. I suggest you go to http://entrepreneurship.columbia.edu and check out the winners of this competition. These are kids that have contracts with the New York Police Department, with the World Health Organization for the stuff that they’ve done.

The third piece is pedagogy …how do you get these tool kits taught in an academically rigorous way? … Steve, you’ve been doing in the Lean LaunchPad course is how do we take that and expand upon it, not just in business but … in policy, in medicine, in public health, because the application of skills in those fields is just as important as it is in a business.

If you can’t hear the clip, click here.

Broken startup dreams
Kathryn Minshew, a former management consultant at McKinsey, is CEO and co-founder of TheMuse.com, a career platform helping 40+ million people build amazing careers.  She previously worked with the Clinton Health Initiative improving access to vaccines in Africa, and has been has been named to INC’s 35 Under 35 and Forbes’ 30 Under 30 lists.

Kathryn shared what she learned from the failure of her first startup, and why that experience can help other founders.  Here’s what she had to say about why the venture failed:

Kathryn: The four of us built this startup, which started off as a side project and slowly turned into a business from September of 2010 to June of 2011. We didn’t really formalize the relationship in terms of equity and decision-making and ownership… Because we couldn’t come to an agreement, we put off the decision.

What we couldn’t (agree to) was how to split founder equity. There were two of us full time on the startup. Two were half time. The people that were full time thought that the equity should be weighted far more towards the full time and the people that were half time thought they were making substantial contributions that wouldn’t be honored without a really sizable chunk.

We also couldn’t agree on when those part-time people would go full time. We also had one person who had brought us all to the table with this original concept of a print magazine. There was … disagreement. Was the idea worth 25%? Is it worth 5%? What’s the answer? I thought it was worth 5% and that was definitely something where there wasn’t total alignment.

We never fully sat down and fleshed out two really big things. One is what’s our mission and who are we for? Two is when the press comes calling or when investors come calling, who do they talk to?

Ultimately, (one of) the big disagreements we had was the fact that I started going to tech events. I didn’t even know that there was a startup culture, that there were events with people who built businesses. When I started meeting those people and going in to that world, I felt like I was among my people for the first time in my life. It was incredible. I would meet reporters or bloggers and they would say, “Oh, maybe I’ll write about you.” Then there was always a conflict (with the co-founders). “Just because you met them doesn’t mean that they get to interview you, maybe they should interview me.”

… Then we had a really silly dispute about whether we were the Zara-Banana Republic-every man type of woman … or whether we were a Louis Vuitton, high-end, super-luxe aspirational brand …

Steve:    It sounds like there were just a whole set of simmering issues because you never did the hard stuff up front. Wasn’t anybody giving you advice at the time?

Kathryn: We definitely knew better. In fact, in February 2011, Alex my business partner, we went out one night after a particularly difficult discussion and she’s like, “Look, maybe we should just like let them do this and leave and go do something else. Just you and me.” I was like, “First off, no my heart is in this. I love it. Two, I really believe that young professionals need something more than they have and I think this is an opportunity. Three, I frankly don’t love the idea of being … I don’t want to be those two jerks that left the others and started a competing company. Why can’t we just work it out?”

Steve:    But in the end, you were the two jerks who left to start a competing company — but you weren’t the jerks at the time.

If you can’t hear the clip, click here.

In the clip below, Kathryn offers her lessons learned from the experience.

Kathryn: Lesson 1: Sit down with a lawyer and sign proper documents. You need to incorporate whether it’s as an LLC, a sole proprietorship… as soon as someone’s putting time or money into the business.

Lesson 2: Do it with an advisor or a lawyer because otherwise you’re reinventing the wheel. You’re trying to make decisions that thousands of people have made before you and often there’s an established wisdom about how to make them, how to handle people who are part time, how to split equity among different … You can change it but you should know what it is first. …

Lesson 3: Have the hard conversations up front. …Were I to do a company again, I would insist on having those conversations first. I think that I’m personally against fully 50/50 splits unless you really think that you’re that one-in-a-million, beat-the-odds because when (the equity is split) 51/49 or anything else ultimately you both know where you stand. If you’re the 48, you know that if push comes to shove the other person has that. I think what’s difficult is that in a startup most people tend to overvalue their contributions, they’re working very hard … I think it’s important to have that structure in place. 

Steve:    That’s a big idea for our listeners. I personally went through this as well in my last company, luckily my partner Ben Wegbreit was much smarter than I was and he said “Steve, no. Let me explain to you how we’re going split this up.” While we all might be founders it’s not “I’m going to be equal.” …

Kathryn: Absolutely and that brings me to another point which is have vesting. Make sure that your stock doesn’t accrue upfront …

Steve:    You’ve had your stock accrue up front?

Kathryn: Well we didn’t have it accrue at all but …

Steve:    Boy were you guys naïve.

Kathryn: Oh yeah we were … but I made the mistakes so your (listeners) don’t have to.

If you can’t hear the clip, click here.

Early paths
During their interviews, Richard and Kathryn also shared stories of their early lives, tracing career paths that turned out different than they’d expected.

Richard recounted how he got into Columbia University as an undergrad without ever applying.
… It was time for me to enter college in 1971. I wanted to go to Harvard more than anything else in this world. I only applied to two schools … Harvard and … Amherst. I did not get into Harvard. I did get into Amherst. I went up to visit Amherst and said, “Shucks, I don’t really want to live in the middle of nowhere.” My sister who was a Barnard at the time said, “Apply to Columbia. Nobody’s applying here because of the riots in ’68.” Enrollment was way down. … New York was not a happy place to be in 1971. I made a few phone calls. They admitted me over the phone. I never really filed an application. I just kind of got in on the phone call. … I majored in comparative literature, of course — consistent with being a Wall Street titan and an entrepreneur.


If you can’t hear the clip, click here.

Richard also explained why he hated being a lawyer:
It was a medium-sized firm called Baer Marks & Upham … kind of a specialty firm that focused on securities, commodities law. The good news was I had a great boss. I got to meet people at Goldman Sachs as a consequence of this focused practice of law. The bad news was I didn’t like being a lawyer. I liked being in the process of solving problems, but I wanted to be more of a principal in the engagement, not a functionary.

If you can’t hear the clip, click here.

And Richard told me why he believes in serendipity
For me, serendipity means putting yourself into a position to recognize opportunity and challenge. It means showing up. It means pursuing ideas, having guts, don’t be afraid to fail, and I associate so much of this with what an entrepreneur needs to do, and that’s the reason I think I’m so attracted to this personally. Entrepreneurs find problems that need to be solved, ratify that there is value in solving them, bring together resources and then scale.

If you can’t hear the clip, click here

Listen to Richard’s full interview here.

If you can’t hear the clip, click here.

Kathryn shared how she became interested in startups:
One of my friends at McKinsey was starting a company… Sir Kensington’s Gourmet Scooping Ketchup. You can buy their condiments in Whole Foods and a lot of places. He was working on that in his nights and weekends and I started helping out with my friend Alex who is now my co-founder. …I loved it. I thought… this is so exciting. … There were a couple of fly-by (startup experiences) earlier in my career, but …this was the first time I was paying close attention. … My father had actually done startups when I was really young … I wasn’t old enough to know anything about it except that they were really hard and that he had ended up going into slightly later-stage businesses. …He always talked about how much fun it is to build something.

If you can’t hear the clip, click here.

And Kathryn recounted where the idea for her first company originated:
A friend I had worked with, at McKinsey was like, “Let’s start a print magazine for successful women in their 20s like us, who care more about getting a raise than what color nail polish is hot for fall.” I was like, “I love that idea. Let’s do it, but it shouldn’t be a print magazine. It should be digital.” Lo and behold, four of us started this blog, this website. … We didn’t have a business model in the early days. We didn’t know a lot, but we had a very crystal-clear sense of the demographic we were serving and the need that they had. …It was women in the first, say, 10 years out of school, who were looking to get that position that they were excited about, get a promotion, get more responsibility, to find some sort of professional satisfaction, be that in a variety of contexts and they wanted community and they wanted help.  …

If you can’t hear the clip, click here.

Listen to Kathryn’s full interview here.

If you can’t hear the clip, click here.

Listen to Richard’s and Kathryn’s full interviews by downloading them from SoundCloud here and here.

Coming up next on Entrepreneurs are EverywhereAnand Sanwal of CB Insights and Chris Shipley
Tune in Thursday at 1 pm PT, 4pm ET on Sirius XM Channel 111

Why Corporate Entrepreneurs are Extraordinary – the Rebel Alliance

I’ve spent this year working with corporations and government agencies that are adopting and adapting Lean Methodologies. The biggest surprise for me was getting schooled on how extremely difficult it is to be an innovator inside a company of executors.


What Have We Lost?
I’ve been working with Richard, a mid-level executive in a large federal agency facing increasing external disruption (technology shifts, new competitors, asymmetric warfare, etc.). Several pockets of innovation in his agency have begun to look to startups and have tried to adopt lean methods. Richard has been trying to get his organization to recognize that change needs to happen. Relentless and effective, Richard exudes enthusiasm and radiates optimism. He’s attracted a following, and he had just been tapped to lead innovation in his division.

He’s working to get his agency to adopt Lean and the Horizon 1, 2, and 3 innovation language (Horizon 1 executes current business models, Horizon 2 extends current business models and Horizon 3 searches for new business models) and was now building a Lean innovation pipeline created out of my I-Corps/Lean LaunchPad classes.

Yet today at dinner his frustration just spilled out.

“Most of the time our attempts at innovation result in “innovation theater” – lots of motion (memos from our CEO, posters in the cafeteria, corporate incubators) but no real change. We were once a scrappy, agile and feared organization with a “can-do” attitude. Now most people here don’t want to rock the boat and simply want do their job 9 to 5. Mid-level bureaucrats kill everything by studying it to death or saying it’s too risky. Everything innovative I’ve accomplished has taken years of political battles, calling in favors, and building alliances.” He thought for a minute and said, “Boy, I wish I had a manual to tell me the best way to make this place better.”

Richard continued, “Innovation is something startups do as part of their daily activities – it’s in their DNA. Why is that?”

While I understood conceptually that adopting new ideas was harder in larger companies, hearing it first-hand from a successful change agent made me realize both how extraordinary Richard was and how extraordinarily difficult it is to bring change to large organizations. His two questions– 1) Was there a manual on “how to be a successful corporate rebel”? and 2) Why are startups innovative by design but companies are innovative by exception?–left me searching for answers.

Why Startups are Innovative by Design
If you come from the startup world, you take for granted that on day one startups are filled with rebels. Everyone around you is focused on a single goal – disrupt incumbents and deliver something innovative to the market.

In a (well-run) startup, the founder has a vision (at first a series of untested hypotheses) and rallies employees and investors around that singular idea. The founders get out of building and rapidly turn the hypotheses into facts by developing a series of incremental and iterative minimal viable products they test in front of customers in search of product-market fit.

While there might be arguments internally about technology and the right markets, no one is confused about the company’s goal – find a sustainable business model, get enough revenue, users, etc., before you run out of money.

Every obstacle Richard described in his agency simply does not exist in the early days of a startup. Zero. Nada. For the first year or so startups actually accumulate technical and organizational debt as they take people and process shortcuts to just get the first orders, 100,000 users or whatever they need to build the business. All that matters is survival.  Process, procedures, KPI’s, org charts, forms, and bureaucracy are impediments to survival as a new company struggles to search for and find a repeatable business model. Founding CEO’s hate process, and actually beat it out of an organization when it appears too early.

In the technology world companies that grow large take one of two paths. Most common is when startups do find a repeatable and scalable business model they hire people to execute the successful business model. And these hires turn the startup into a company – a Horizon 1 or 2 execution organization focused on executing and extending the current business model – with the leadership incented for repeatability and scale. (See here for explanations of the three Horizons of Innovation.)

But often as the company/agency scales, the early innovators feel disfranchised and leave. Subsequently, when a technology and/or platform shift occurs, the company becomes a victim of disruption and unable to innovate, usually stagnates and dies.

Alternatively, a company/agency scales but continues to be run by innovators. The large companies that survive rapid technology and/or platform shifts are often run by founders, (Jeff Bezos at Amazon, Steve Jobs at Apple, Larry Page at Google, Larry Ellison at Oracle) or faced with an existential crisis and forced to change (Satya Nadella at Microsoft) or somehow have miraculously retained an innovation culture through multiple generations of leadership like W.L. Gore.

I offered that perhaps his top-level management would embrace Three Horizons of Innovation from the top-down. Richard replied, “In a perfect world that would be great, but in most agencies (and companies) the CEO or board is not a visionary. Even when our CEO’s acknowledged the need for Horizon 3 innovation, the problem isn’t solved because entrepreneurs run into either “a culture of no” or worse yet the intransigent middle management.

Richard explained, “In a Horizon 1-dominated culture, where everyone is focused on Horizon 1 execution, you can’t grow enough Horizon 3 managers. Instead we’ve found that support for innovation has to come from rare leaders embedded in the Horizon 1 organizations who “get it.” We’ve always had to hide/couch Horizon 3 style change in Horizon 1 and Horizon 2 language, which is maddening but I do what works.  In Silicon Valley, the operative word in any pitch is “disrupt.”  In Horizon 1 organizations, uttering the word “disrupt” is the death of an idea.”

That really brought home the stark difference between our two worlds.

(Lean Innovation management now offers Horizon 1 executives a set of tools that allow them to feel comfortable with Horizon 2/3 initiatives. Investment Readiness Levels are the Key Performance Indicators for Horizon 1 execs to measure progress.)

What about a manual of “how to be a successful corporate rebel”? Serendipitously after I gave my Innovation @ 50x presentation, someone gave me a book saying “thanks for the strategy, but here are the tactics.”  This book entitled Rebels@Work had some answers to Richard’s question.

Rebels at Work
If you’re a mid-level manager in a company or government agency trying to figure out how to get your ideas adopted, you must read Rebels@Workit will save your sanity. rebels at workThe book, which was written by successful corporate innovators, offers real practical, tactical advice about how to push corporate innovation.

One of the handy tables explains the difference between being a “bad rebel” versus a “good rebel.” The chapters march you through a series of “how to’s”: how to gain credibility, navigate the organizational landscape, communicate your ideas, manage conflict, deal with fear uncertainty and doubt, etc. It illustrates all of this with real-life vignettes from the authors’ decades-long experience trying to make corporate innovation happen.good rebels bad rebels

The Innovation at 50x presentation gives corporate rebels the roadmap, common language, and lean tools to develop a Lean innovation strategy, but Rebels@Work gives them the tools to be a positive force for leading change from within.

After I read it I bought 10 copies for Richard and his team.

Lessons Learned

  • In a startup we are by definition all born as rebels
  • While startups are not smaller versions of large companies, companies are very much not larger versions of startups
  • Canonical startup advice fails when applied in large companies
  • The Three Horizons offer a way to describe innovation strategy across a company/agency
  • Lean Innovation Management allows startup speed inside of companies
  • However:
    • Horizon 1 managers run the company and are not rebels
    • Horizon 3 ideas might have to be couched in Horizon 1 and 2 language
  • Rebels@Work offers practical advice on how to move corporate innovation forward

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